DEFINITION of 'Near The Money'
An options contract where the strike price is close to the current market price of the corresponding underlying security. An options contract is said to be near the money when the strike price and underlying security's price are close; it is at the money when the strike price is equal to the market price of the underlying security. At or near the money options contract typically cost more (i.e. there will be a higher premium) than out of the money options, where the underlying instrument's price is far away from the strike price. Also called close to the money.
BREAKING DOWN 'Near The Money'
An option with a current market value of $20 and a strike price of $19.80 would be considered near the money, as the difference between the strike price and the market value is only 20 cents. Generally, if that difference is less than 50 cents, the options contract is considered near the money.

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How does the term 'in the money' describe the moneyness of an option?
Find out what in the money means about the moneyness of call or put options and what it indicates about the relationship ... Read Answer >> 
What is the difference between in the money and out of the money?
Learn about how the difference between in the money and out of the money options is determined by the relationship between ... Read Answer >> 
What happens when a security reaches its strike price?
Learn more about the moneyness of stock options and what happens when the underlying security's price reaches the option ... Read Answer >> 
Can an option have a negative strike price?
The simple answer is that, at least when it comes to exchange traded options, an option can't have a negative strike price ... Read Answer >> 
How do I set a strike price for an option?
Learn about the strike price of an option and how to set a strike price for call and put options depending on risk tolerance ... Read Answer >> 
Where did the terms inthemoney and outofthemoney come from?
Learn what the terms "in the money" and "out of the money" mean, where the terms come from, and how investors use the terms ... Read Answer >>